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North Carolina Hurricane Insurance: Fact File

AUGUST 2016

North Carolina was one of over a dozen states impacted by Hurricane Sandy in October 2012. Sandy caused $18.75 billion in U.S. property losses, excluding flood insurance claims covered by the federal flood insurance program, according to estimates from ISO’s PCS unit. This would make Sandy the third most costly U.S. hurricane, after hurricanes Katrina and Andrew.

Sandy resulted in $57 million in private insurance claims in North Carolina. At $9.6 billion and $6.3 billion, respectively, New York and New Jersey suffered the largest private insurance losses by far from Sandy.

Five of the top 10 most costly hurricanes to hit the United States did damage in North Carolina: Hurricane Hugo in 1989, Hurricanes Charley, Ivan and Frances in 2004; and Hurricane Sandy in 2012. (See chart below.)

North Carolina was also battered by Hurricane Floyd, which caused $1.4 billion in insured losses in the state in 1999 (about $1.9 billion in 2011 dollars). These loss statistics do not include flood damage covered under the federal government’s National Flood Insurance Program.

There were 130,007 flood insurance policies in North Carolina in 2015. Standard homeowners policies typically do not cover flood damage. Flood insurance is covered by the National Flood Insurance Program.

The insured value of properties in coastal areas of North Carolina totaled $163.5 billion in 2013, accounting for 9 percent of the state’s total insured property exposure, according to an analysis by AIR Worldwide.

Of the 11 most hurricane-prone counties in the U.S., five are in Louisiana, three are in Florida and two are in North Carolina, according to a study by the U.S. Census (see chart).

The number of people living in coastal areas in North Carolina increased by 468,000 people or 105.9 percent, from 1960 to 2008, according to the U.S. Census Bureau.

North Carolina has two residual market plans that act as a market of last resort for residential and commercial property insurance in the state. The North Carolina Joint Underwriters Association (NCJUA) was created in 1969 to make basic and broad property insurance available to those unable to buy coverage through the standard insurance market. The plan, known as a FAIR Plan, covers the entire state except those barrier islands adjacent to the Atlantic Ocean. The North Carolina Insurance Underwriting Association (the state’s Beach Plan), also created in 1969, provides windstorm and hail coverage as well as homeowners policies for properties located in the state’s beach and coastal area.

As of fiscal year 2015, North Carolina’s beach and windstorm plan reported a total of 255,131 policies up from 94,612 policies reported at the end of 2004. Total exposure to loss under the plan increased to $88.6 billion in fiscal year 2015 from $31.6 billion in 2004 – an increase of almost 200 percent.

The North Carolina JUA/IUA plans have accessed the capital markets four times (2009-2011 and 2013) to provide them with additional reinsurance protection in the event of a hurricane. The NCIUA/NCJUA’s risk financing program provides approximately $3.8 billion in protection for the benefit of North Carolinians.

Top 10 Writers Of Commercial Insurance In North Carolina By Direct Premiums Written, 2015 (1)

(1) Includes residential and commercial Gulf and East Coast properties, as of December 31, 2012. Ranked by value of total insured coastal property.
(2) Total exposure is an estimate of the actual total value of all property in the state that is insured or can be insured, including the full replacement value of structures and their contents, additional living expenses and the time value of business interruption coverage.